Ireland’s Department of Finance Begins Setting Up 2 Sovereign Wealth Funds

The Future Ireland Fund and the Infrastructure, Climate and Nature Fund are expected to grow to 100 billion euros and 14 billion euros, respectively.

The government of Ireland Thursday officially established two sovereign wealth funds, to be funded from annual contributions from the country’s tax collections.

The two funds, the Future Ireland Fund and the Infrastructure, Climate and Nature Fund, will be funded by “record corporation tax receipts.” In 2023, corporate taxes reached a record 24 billion euros ($25.92 billion).

The first fund, the Future Ireland Fund, is a long-term-savings fund intended to set aside government revenue to help offset future expenditure pressures related to aging, climate and other economic challenges. To fund the Future Ireland Fund, the government will transfer an amount equal to 0.8% of the country’s GDP each year from the country’s tax revenue from 2024 to 2035. With annual contributions, investment returns and GDP growth, the Future Ireland Fund is expected to grow to 100 billion euros ($107.90 billion) by 2040.

An additional 2 billion euros will be transferred each year until 2030 to fund the Infrastructure, Climate and Nature fund. This fund aims to provide capital to the government during economic downturns, when capital expenditure would otherwise be reduced. Up to 25% of the fund would be able to be drawn down in a single year if the government determines that an economic downturn is likely.

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The fund will also support investments in climate neutrality, starting in 2026, and up to 22.5% of the fund can be drawn down to support climate- and nature-related investments. By 2030, the government aims to grow the fund to 14 billion euros in assets.

Plans to establish the funds were first announced in October 2023. A law providing for enactment of the funds was passed on June 18.

The next step in the process will be to finalize both funds’ investment strategies. By the end of the year, the funds will have at least 10 billion euros in assets; the country’s rainy-day fund, the National Reserve Fund, will be dissolved, and its assets will be transferred to the two new funds.